|Tax avoidance||Tax evasion|
|Legal way of saving taxes.||Illegal in a financial system|
|Recording of income||Not recording of income.|
|Help in saving, at the same time money can be channelized for economic growth||Help in saving, but since money is not accounted. Money cannot be channelized for economic growth.
|Tools: Health scheme, donation, insurance,||Tools : black money, under invoicing , smuggling, hawala|
Different methods of Tax evasion are as follows:
- Failure to pay the due: not paying taxes on time.
- Filing false income tax and wealth tax returns
- Maintaining wrong financial statements, showing forged profit and loss account.
- Using fake documents to claim exemptions and deductions.
- Sending money outside , creating swiss accounts
- Wrong use of Tax treaties like DTAA, round tripping
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